New York Attorney Convicted Of Securities Fraud And Wire Fraud Conspiracies
Evan Greebel Conspired with Hedge Fund Manager Martin Shkreli to Steal Millions of Dollars from a Biopharmaceutical Company and Conceal the Scheme
Evan Greebel, a former partner at the New York office of Katten Muchin Rosenman LLP who served as outside counsel to Retrophin Inc., a biopharmaceutical company, was convicted today by a federal jury in Brooklyn of two counts of a superseding indictment charging him with conspiracy to commit securities fraud and conspiracy to commit wire fraud. The verdict followed an 11-week trial before United States District Judge Kiyo A. Matsumoto.
Bridget M. Rohde, Acting United States Attorney for the Eastern District of New York, and William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), announced the verdict.
“By helping Retrophin CEO Martin Shkreli steal millions of dollars and cover up Shkreli’s fraud, the defendant Evan Greebel betrayed the trust placed in him by Retrophin’s board of directors to represent the company’s best interests,” stated Acting United States Attorney Rohde. “Today’s verdict sends a powerful message that this Office, together with our law enforcement partners, will hold lawyers accountable when they use their legal expertise to facilitate the commission of crimes.” Ms. Rohde thanked the Securities and Exchange Commission, New York Regional Office (SEC), and the Financial Industry Regulatory Authority, Inc., Criminal Prosecution Assistance Group (FINRA CPAG), for their significant cooperation and assistance in this case.
“Greebel’s conviction highlights the deliberate actions he took in conspiring with hedge fund manager Martin Shkreli to defraud investors,” stated FBI Assistant Director-in-Charge Sweeney. “While it’s become increasingly more evident that Greebel exploited his knowledge of the law in his efforts to break the law, today we finally see justice served in a case that’s spent no shortage of its time in the spotlight. Investment fraud remains a priority for the FBI’s New York Office.”
The evidence at trial established that between 2011 and 2014, Greebel conspired with Shkreli and others in a scheme to misappropriate Retrophin’s assets in order to pay off defrauded investors in Shkreli’s hedge funds, MSMB Capital Management LP (MSMB Capital) and MSMB Healthcare Management LP (MSMB Healthcare). As part of this scheme, Greebel negotiated and prepared so-called “settlement” agreements with certain defrauded MSMB Capital and MSMB Healthcare investors, which caused Retrophin to reimburse those investors more than $2 million in cash and stock for their lost investments in Shkreli’s hedge funds even though Retrophin was not responsible for those losses. Greebel also arranged for certain other defrauded investors to enter into sham consulting agreements with Retrophin as a means to settle liabilities owed by Shkreli and the hedge funds.
In addition, between 2012 and 2014, Greebel and Shkreli engaged in a scheme to defraud investors and potential investors in Retrophin by attempting to illegally control the price and trading volume of Retrophin’s stock. Greebel and Shkreli executed this scheme by, among other things, concealing Shkreli’s beneficial ownership and control of the majority of Retrophin’s free-trading shares. Greebel and Shkreli recruited associates of Shkreli to be nominee shareholders for the majority of Retrophin’s free-trading shares, and they also filed a false document with government regulators to hide the fact that Shkreli controlled those shares. Greebel and Shkreli not only prevented nominee employees from selling these shares, but also directed that some of the shares be used to settle liabilities owed by the MSMB hedge funds and Shkreli.
When he is sentenced, Greebel faces a maximum of 20 years in prison on the top count of conviction.
In August 2017, co-defendant Shkreli was convicted of securities fraud and securities fraud conspiracy by a federal jury following a six-week trial before Judge Matsumoto. Shkreli is awaiting sentencing.
The government’s case is being handled by the Office’s Business and Securities Fraud Section. Assistant United States Attorneys Alixandra Smith, David Pitluck and David K. Kessler are in charge of the prosecution.
Scarsdale, New York
Manhattan, New York
E.D.N.Y. Docket No. 15-CR-637 (KAM)